Chile’s Private Pension Plan Who benefits? By: Nitish Rajbhandary, Catie Whelan, Kevin Slattery

Introduction I.Thesis Statement II.History of Pension System in Chile III.Benefits of the System IV.Problems with the System V.Recommended Reforms VI.Conclusion

Thesis Chile’s private pension system functions well when workers contribute on a regular basis. However, the pensions plan fails vulnerable groups such as women, unemployed, and self employed workers.

History Pay-as-you-go-system Privatized under Pinochet in 1981 Why was it privatized? Fiscal pressure Redistributive features How system functions

Types of Social Security

Benefits Reduce Government Obligations Encourages Savings Possible Economic Growth Employer may pay High Rates of Return

Returns

Problems Difficult to Diversify Holdings Competition AFP Commission Cost Coverage

Reforms Labor Law Reforms Increase Holding Diversification Minimum Pension Guarantee Gender Reforms Default coverage for self-employed

Conclusion Chile’s pension system provides better coverage than Social Security in the United States, however it still needs some reforms in order to cover everyone. Women, unemployed and self-employed are the most at risk of not receiving an adequate pension after retirement.

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